Tag Archives: wall street journal

Driverless Vehicles: Brace for Impact

On June 26, Waymo (Google’s autonomous car firm), signed a deal under which Avis Budget Group will provide “fleet support and maintenance services” to Phoenix-area Waymo vehicles. Waymo uses Chrysler Pacifica minivans to autonomously shuttle Phoenix residents around town. Its first fleet of 100 minivans quickly grew into an order for 500 more.

The Waymo/Avis agreement may only be a pilot, but the implications are enormous. Not unlike standard cab companies, Waymo realized that a fleet of autonomous vehicles would need cleaning and maintenance throughout the day and storage throughout the night. When practical matters like auto cleaning and storage become news enough for a press release, something big is going on.

Here are some fun facts:

  • According to USA Today, Avis’ stock rose 14% on the news.
  • The Chrysler Pacifica was chosen, in large part, because it could close its own doors. Waymo usage experts theorized that riders might often hop out and forget to close the door.
  • Within hours of the Waymo announcement, Apple likewise unveiled a deal where Hertz Global would manage its autonomous fleet.

Autonomous vehicles have picked up the pace of disruption over the last two years. What will life be like when the Autonomy of Things takes on many of our everyday behaviors or occupations, like driving? Will we be safer? Will we need insurance? Will auto manufacturers cover accidents via product liability? Who will cover bodily injury or property damage? How will risk products be changed to fit this new model? Is there an insurance right-road to surviving autonomy?

See also: The Evolution in Self-Driving Vehicles  

Is Autonomy Impact Still Underrated?

There has been a lot of talk and certainly a wealth of words written on the impact of auto autonomy, and safety is at the top of the concerns and promises of autonomous vehicles. Insurers are, of course, focused on how autonomous vehicles might cause a decline in the need for auto insurance.

The pace of development, rollout, experimentation and expansion of autonomous vehicles has far exceeded original expectations. In his blog, Peter Diamandis (XPrize Founder) noted that a former Tesla and BMW executive said that self-driving cars would start to kill car ownership in just five years. John Zimmer, the cofounder and president of Lyft, said that car ownership would “all but end” in cities by 2025.

The Wall Street Journal reported in July 2016 that auto insurance represents nearly a third of all premiums for the P&C industry, with projections that 80% could evaporate over the next few decades as autonomous vehicles are introduced, some of them replacing legacy vehicles and some created for shared transportation. At the same time, U.S. government support strengthened in September 2016 when federal auto safety regulators released their first set of guidelines, sending a clear signal to automakers that the door was wide open for driverless cars and betting that the nation’s highways will be safer with more cars driven by machines instead of people.

Those statements, among others, might cause some scrambling. Manufacturers are working frantically to partner with AI providers, cab services and ridesharing services such as Uber, Lyft and Waymo. Naysayers will note that rural areas will be highly unlikely to use autonomous vehicles soon, and it’s true that the largest impact may be in urban areas. But if car ownership were even cut by 5% by 2030, a tremendous number of auto manufacturers and auto insurers would be affected.

Autonomy and its insurance impact isn’t limited to personal autos. Truck company Otto is testing self-driving commercial trucks — a necessary automation that could help alleviate the growing lack of truck drivers. Husqvarna has several models of autonomous lawn mowers on the market. Yara and Rolls Royce are among companies working on autonomous ships. Case, John Deere and Autonomous Tractor Corporation have all been developing driverless tractors.

In nearly every one of these cases, there are safety benefits and disruptive insurance implications, but there are also revenue growth opportunities for those that think more broadly and “outside the box.” From developing partnerships with automotive companies to leveraging the autonomous vehicle data for new services, each offers alternative revenue streams to counter the decline of traditional auto insurance. The key is experimenting with these technologies to find alternative “products and services” and develop an ecosystem of partners to support this, before the competition does.

Share and Transportation as a Service — Insurers May Like

In our report, A New Age of Insurance:  Growth Opportunity for Commercial and Specialty Insurance in a Time of Market Disruption, we cite a report from RethinkX, The Disruption of Transportation and the Collapse of the Internal-Combustion Vehicle and Oil Industries, which says that by 2030 (within 10 years of regulatory approval of autonomous vehicles), 95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model called “transport-as-a-service” (TaaS). The report says the approval of autonomous vehicles will unleash a highly competitive market-share grab among existing and new pre-TaaS (ride-hailing) companies in expectation of the outsized rewards of trillions of dollars of market opportunities and network effects.

Welcome to the adolescence of the sharing economy and transportation as a service. Autonomy isn’t the only road for vehicle progress. Vehicle sharing is growing and will remain in vogue for some time. Just as Airbnb and HomeAway have given rise to new insurance products, Zipcar and Getaround and Uber have given rise to new P&C products.

At the same time, a merging of public and private transportation and a pathway to free transportation is in the early stages of being created in the TaaS model. This will shift risk from individuals to commercial entities, governments or other businesses that provide the public transportation, creating commercial lines product opportunities beyond traditional “public transportation.”

Vehicle users, whether they are riders, borrowers, sharers or public entities, are going to need innovative coverage options. Tesla and Volvo may be promising some level of auto coverage for owners of autonomous vehicles, but that kind of blanket coverage is likely to mimic an airline’s coverage of passengers and cargo — it will be limited. Those who lend their vehicle, through a software-based consolidator, such as Getaround, will need coverage that goes beyond their auto policy.

In the past few weeks, we’ve also seen how cyber attacks can undermine freight and shipping, not to mention systems. Nearly all of these service-oriented options will require new types of service-level coverage. Autonomous freight may be safer in transit, but in some ways it may also be less secure.

The lessons appear to be found in brainstorming. Technology is breeding diversity in service use and ownership. There will be new coverage types and new insurance products needed.

See also: Will You Own a Self-Driving Vehicle?  

Up Next … Flying Vehicles

Remember the movie “Back to the Future” and the Jetsons flying cars that were so cool? Well, they are quickly becoming a cool reality. A June 2017 Forbes article says flying cars are moving rapidly from fiction to reality, with the first applications of flying vehicles for recreational activities in the next five years. The article says that, in the past five years, at least eight companies have conducted their first flight tests, and several more are expected to follow suit, indicative of the frenzied activity in this space.

Companies such as PAL-VTerrafugia, AeromobilEhangE-VoloUrban AeronauticsKitty Hawk and Lilium Aviation completed test flights of their flying car prototypes, with PAL-V going further by initiating pre-sales of its Liberty Pioneer model flying car, which the company aims to deliver by the end 2018. This sounds like Tesla and its pre-sales move!

Not to be left behind … ride-sharing companies are aggressively entering the space. Uber launched the Uber Elevate program, with a focus on making flying vehicles transport a reality by bringing together government agencies, vehicle manufacturers and regulators. Google and Skype are entering the space by investing in start-ups: Google in Kitty Hawk and Skype in Lilium Aviation. Not to be left behind, Airbus has unveiled a number of flying car concepts, with plans to launch a personal flying car by 2018. Airbus also plans to build a mass transit flying vehicle…the potential next TaaS option.

So, it pays for insurers to keep their attention on autonomous vehicle trends … because it is more than the personal autonomous vehicle … it is the transformation of the entire transportation industry and will have a significant impact on premium and growth for auto insurers. As we recently found in our commercial and specialty insurance report, the transportation industry is rapidly changing and new technologies may be lending themselves to safety, but the world itself isn’t necessarily growing any safer.

Risk doesn’t end. Insurers will always be helping individuals and companies manage risk. The key will be using the trends to rapidly adapt to a shift to the new digital age. Insurers will need to understand and value new risks and offer innovative products and services that meet the changing needs in this shift during the digital age.

Lemonade: From Local to Everywhere

In a meticulously planned operation, we filed for a license in 47 states simultaneously. We’ll be revealing the first states in which Lemonade will become available in a couple of months. One thing’s for certain, 2017 is going to be an interesting ride! Stay up to date with news about our progress here

Now that I got this off my chest, I can add some color to why we’re doing this.

Many tech startups go through the famous Local vs. Global debate as they start to plan a market penetration strategy. This dilemma was born with the arrival of modern internet commerce and became even more prevalent with the emergence of SaaS companies that provide global coverage right out of the box.

When you’re selling a digital product, going global may seem like small overhead. Reality is a bit different, though, and, more often than not, small startups that take a bigger bite than they can swallow get into trouble.

When feasible, startups should consider aiming their launch beams at a single city or even a town with population that represents their typical customer.

Here’s why:

1. Know thy users, and design for them

It always amazes me how often startups overlook usability testing during the initial design phase. Having videos of random people playing with your (barely working) mockup is priceless. We learned more in a couple of days of testing than we did in months working in our office.

The cool thing is that you only need about five testers to get value out of a session like that, so there’s really no excuse to not doing it. The smaller the area you launch in, the better the chance of getting valuable data in a user testing session.

We spent hours in WeWork and Starbucks with our early stage, smoke-and-mirrors version of the Lemonade app. We would show it to people, ask for their feedback, ask them some questions and record the entire session. We would then sit in the office and analyze the videos to figure out what worked and what didn’t.

Our early Starbucks user testing sessions allowed us to launch a relatively mature product into the market and achieve faster adoption by our New York customers.

See also: Let’s Make Lemons Out of Lemonade  

2. Budget

Product launches require spending some money. To improve the chances of success, it is recommended to fuel the organic interest generated by social noise and PR efforts with some paid channels. Got a story in TechCrunch? Bloomberg? It will probably die down quicker than you think.

A nice trick is to use content recommendation tools like Outbrain and Taboola to promote content to users who may be interested in it. Google Ads are another obvious choice. Choosing the right outlets is one thing, but there’s a huge difference in costs between a global campaign and a local one.

This becomes much more dramatic when your company requires additional resources to operate in each region like Groupon and Uber. Lemonade recently closed its third round of financing ($60 million in one year of operation) from top VCs such as Google Ventures, General Catalyst, Thrive, Sequoia, Aleph and XL Innovate. We’re going to use this money to drive our expansion throughout the country and activate specific markets the way we did in New York.

3. Surgical use of media coverage

Getting great media coverage takes a lot of attention and time. Whether you can afford an agency or not, you’ll have to choose your battles well. Launching in a specific city allows you to focus on the outlets that are most relevant and will simplify your pitch to journalists.

If you’re creating something exclusive for a certain region, reporters who cover that region usually have a hunger for tech stuff that is happening, or launching in their hometown before everywhere else. BTW, there’s a case for launching in unexpected places like Portland or Philadelphia, which usually don’t get much attention from the tech and consumer industry for new products. There’s a good chance that media reach (which expands far beyond just the place you’re starting from) will be much stronger.

We chose New York for Lemonade’s home. We see NY’ers as an ideal representation of our target demographic and personality. So we invested our efforts in a select few outlets that are read by our first wave of early adopters of the city’s financial workers and young professionals — NY Post, Bloomberg and Wall Street Journal.

4 . Brand and messaging

Building a great brand involves a lot of consumer psychology. You spend weeks trying to figure out the best tagline, the perfect ad and the right illustrator to do your art. If you get this right, you have a real chance at grabbing your customers’ attention.

The first few months of brand activation are critical. Limiting yourself to a select region or demographic allows you to be laser-focused on framing and positioning.

Lemonade Local

Building an insurance company from scratch, in New York, one of the toughest regulatory environments in the country, is a huge undertaking. The sheer complexity and investment required to get to the starting point includes raising a lot of capital and hiring the right people to be able to get licensed by the state’s Department of Financial Services.

This is the life of a company that operates in a highly regulated industry, and it’s unlike anything I’ve ever seen in the tech space. For Daniel and me, the decision to start in one state was simple. There’s no other way. Insurance carriers have to choose a state. Just one. And then maybe, if you play nice, regulators will let you go for more.

We wanted to launch Lemonade in one state — NY, and even more so when we realized we had no choice 🙂

See also: Lemonade: A Whole New Paradigm  

In the last three months since our New York launch, we’ve had overwhelming demand coming in from all over the country to open up for business in more states. This was very encouraging because it showed us hints of initial demand and product market fit to people and age groups that we never thought would be our early adopters.

But what surprised us most was the excitement coming from unexpected places, such as government offices and regulators. Having a favorable regulatory environment is a great opportunity to bring an honest, affordable, transparent and fun insurance experience to everyone in the U.S.!

Be the first to know how we’re making progress with our nationwide expansion.

Here’s the list of states where we will gradually launch in the coming year or so:

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin

* States in bold represent the ones most requests to launch came from

This article originally appeared here, and you can find more about Lemonade here.

The Next Opioid Epidemic: Fentanyl

Fentanyl has been in the news:

In 2014, it began being reported on the U.S. East Coast that heroin was being laced with fentanyl, creating a combination that is “untenably addictive.”

The Sacramento Bee reported in April that 51 overdoses, including 11 deaths, had been reported thus far in the Sacramento area in 2016; toxicologists tied eight of the deaths directly to fentanyl (watch the short video in the article that describes “death as collateral damage” to the drug dealers interested in market dominance).

Later in April, the L.A. Times reported the issue had migrated to the San Francisco area, where fentanyl pills made to look like Norco were a primary culprit.

The chief health officer in British Columbia proclaimed a Canadian public health emergency because of more than 200 overdose deaths during the first three months of 2016; a large portion of them involved “greenish pills purporting to be OxyContin 80 mg tablets.”

In June, it was confirmed that Prince died from an accidental overdose of fentanyl, unbelievable because he was an outspoken advocate of clean living (from having a “swear jar” to not consuming alcohol)

One of the common threads throughout these stories is China’s involvement. The Wall Street Journal published a front-page article on June 23 titled “China’s Role in U.S. Opioid Crisis.” The opening paragraph sets the stage:

Last spring, Chinese customs agents seized 70 kilograms of the narcotics fentanyl and acetyl fentanyl hidden in a cargo container for Mexico. The synthetic opium-like drugs were so potent that six of the agents became ill after handling them. One fell into a coma.

The article goes on to describe how fentanyl often is disguised as hydrocodone and Xanax on the black market — dangerous drugs by themselves but not nearly as potent or fatal as fentanyl. Because China does not regulate fentanyl or analogs used to create fentanyl, there is a significant financial incentive for the drug dealers — $810 of materials can create 25 grams of fentanyl and yield as much as $800,000 in pills sold on the black market.

See also: Opioids Are the Opiates of the Masses

According to the Canadian Globe’s expose on the issue (an excellent look at the black market), accessing fentanyl can be as easy as “Sign up for an account, choose a method of payment, and receive the package in three to four business days.” Reinforcing the financial model: “A kilogram ordered over the internet – an amount equal in weight to a medium-sized cantaloupe – sells on the street in Calgary for $20 million, making it a drug dealer’s dream.”

So, fentanyl is a problem. It’s 25 to 50 times more potent than morphine. It’s highly addictive. It’s available fairly easily on the black market. And it is prescribed by doctors. Way too often.

Approved by the FDA and on script pads supplied by the DEA, its federal legitimacy adds to the lack of stigma associated with use. Which is one reason why I think Prince could rationalize his use. A doctor likely prescribed it for his chronic pain — and other patients fall into that same trap (with fentanyl and other dangerous prescription drugs).

According to the FDA’s own warnings (as reported on drugs.com):

Because of the risks of addiction, abuse and misuse with opioids, even at recommended doses, and because of the greater risks of overdose and death with extended-release opioid formulations, reserve Fentanyl Transdermal system for use in patients for whom alternative treatment options (e.g., non-opioid analgesics or immediate-release opioids) are ineffective, not tolerated or would be otherwise inadequate to provide sufficient management of pain.

See also: How to Help Reverse the Opioid Epidemic  

In my opinion, fentanyl should be used to help people die with dignity during end-of-life care. Period. It’s that dangerous. And yet we see it being prescribed, used and paid for.

Month. After. Month.

If you are prescribing fentanyl: Why?

If you are being prescribed fentanyl: Why?

If you are paying for someone’s fentanyl: Why?

Too many people are overdosing and dying not to ask a simple question: Why?

Verizon Strike: Silver Lining and a Lesson

A strike of 40,000 Verizon employees could be the best thing that has ever happened to the telecom company’s customer experience.

That’s not because the managers filling in for the front-line workers are better at serving customers (a company executive acknowledged as much in a recent Washington Post interview).

Rather, it’s because these managers are getting a first-hand, unvarnished look at what it’s like to be on the front-line. They’re seeing, with their own eyes, the obstacles that hamper employees’ best efforts to deliver a consistently great customer experience.

Verizon managers and professional staff who normally work with spreadsheets, reports and legal briefs are instead donning call center headsets, laying fiber optic cable and installing internet service. And, as the Wall Street Journal recently reported, when these organizational leaders temporarily take on a front-line role, they’re spotting a variety of improvement opportunities.

An operations head whose management reports frequently showed wide variations in TV/internet installation times suddenly saw the reasons why such variations exist, putting him in a much better position to come up with solutions.

An engineer who normally monitored Verizon’s network from an office cubicle quickly discovered how work schedules can be completely disrupted when installers don’t get the information they need (such as whether a customer’s residence has previously been wired for cable or Internet).

Front-line annoyances — things that make workers’ jobs harder than they need to be — also came to light, such as how quickly the batteries drained in field technicians’ smartphones and tablets. (A Verizon manager is now exploring supplying the company’s installers with portable battery packs for their devices.)

See also: Is Verizon About to Outmaneuver Insurers?

These examples all illustrate the inherent limitations of relying on spreadsheets, reports and other traditional management information sources to reveal workplace impediments.

The internal obstacles that undermine a company’s customer experience are frequently rooted in some of the most mundane and unglamorous activities. They involve things that often don’t make it into a management report and don’t get discussed at an executive staff meeting.

By periodically venturing “into the wild” and stepping into the shoes of employees, managers can guard against this blind spot. They can witness what’s really happening on the front lines and can gain insight that’s difficult to obtain in any other way.

When armed with this unfiltered perspective, managers are much better equipped to develop actionable improvement plans — the kind that don’t just enhance the customer experience but the employee experience, too.

Don’t wait for a worker strike or some other crisis situation before venturing out to your front line. Set aside time now and start walking a few miles in your staff’s shoes.

As Verizon’s managers are fast learning, there’s no better way to understand and start overcoming the internal impediments that can sabotage your customer experience.

This article first appeared at Watermark Consulting.

Smart Homes Are Still Way Too Stupid

It’s nice to know sharp people — in this case, Rich Jaroslovsky, a former colleague at the Wall Street Journal who is now a vice president at SmartNews. He just wrote a takedown of the smart home that saved me the trouble.

I had visited the topic in a general way a year ago in an article taking issue  with something Google’s executive chairman, Eric Schmidt, had said about how the Internet will disappear. My basic complaint about how even really smart people think about automation is that automation is often more trouble than it’s worth and that people blithely assume I’d like to automate decisions that, in fact, I don’t want automated — no, I don’t want my refrigerator ordering milk for me, my lights to always flip on a certain way when I walk through the door or my TV to always turn to ESPN when I wake up.

Recent stories about the glories of the smart home made me think I needed to return to the subject, more specifically this time — I’m cranky on the subject of the smart home because I’ve been hearing variations on this theme for 25 years without seeing a result; no, Nest doesn’t count. I was prompted into action when I received the following in an email this morning:

“Many large U.S. insurers are bracing for the impact of autonomous driving on their business, but they have yet to grasp that the same trend is at play in the homeowners and renters insurance markets. Insurers that don’t develop a value proposition around the connected home will be forced to give steeper discounts to reflect the lower risks without generating any strategic benefits. Savvy insurers that adapt to the new dynamic have a historic opportunity to become far more relevant than they are today.

“Based on over 100… discussions conducted between November 2015 and February 2016 with smart-home technology vendors; P&C, health, and life insurers; venture capital firms; and technology vendors, this report examines the connected-home use case for the insurance industry, profiles two turnkey smart-home… and mentions 147 other firms.” [I deleted three corporate names in there, including the author of the report, because I don’t see any need to make this personal, even though you’re expected to pay real money for that report.]

Just when I was gearing up to write something on the smart home, though, I saw that Rich had posted his column, which begins:

“With every new smart device I add to my home, it gets a little dumber.

“The thermostats don’t talk to the lights. The security cameras don’t talk to the alarm system, which doesn’t talk to the garage door. The networked speakers talk to each other—but not to the TV sitting a few feet away. Just about every device has its own app for my smartphone, but since none of them work with each other, I’ve got 15 apps controlling 15 functions.”

I encourage you to read the whole piece, especially if you harbor hopes that the smart home is a looming opportunity. As Rich notes, you can’t have a connected home if the devices don’t talk to each other. And while I may have a “standard” for communication, if Rich has a separate standard and so do 87 others of you, then we don’t, in fact, have a standard way of communicating.

We’ll get to the smart home.

But not soon.